Decision ends 2006 case over WGA software sent as security update

A federal judge last week dismissed a three-year-old lawsuit that accused Microsoft of duping customers when it fed them company anti-piracy software as a critical security update, court documents show.

U.S. District Court Judge Richard Jones dismissed the case last Friday, a day after the plaintiffs and Microsoft agreed to drop the lawsuit.

"We are pleased this resolved successfully," said Kevin Kutz, director of public affairs for Microsoft.

Last month, Jones denied several motions by the plaintiffs, including one that would have given them a third chance to turn the case into a class-action lawsuit. That essentially put an end to the action, and ensured Microsoft would not face millions in potential damages.

In June 2006, Microsoft pushed its Windows Genuine Advantage (WGA) anti-counterfeit software to Windows XP as a "high priority" update that was automatically downloaded to and installed on most machines. Microsoft relies on WGA, and its successor, Windows Activation Technologies (WAT), to detect bootlegged copies of Windows. If the software sniffs out a counterfeit, it posts nagging messages on the screen.

Multiple lawsuits filed in July 2006 claimed that Microsoft mislead users by labeling the WGA software as a security update, and failed to tell customers that WGA collected information from their PCs, then frequently "phoned home" the data to Microsoft's servers. The plaintiffs later combined their cases and asked the court to grant the joint lawsuit as a class-action.

Last year, Microsoft warned Jones that if the lawsuit was allowed to proceed as a class-action, it could be tapped for big money. "Plaintiffs seek hundreds of millions of dollars on behalf of tens of millions of persons for twelve forms of alleged damages," Microsoft said as it cast the plaintiffs as little more than gold diggers.

In his January ruling, Jones had also said that Microsoft could demand compensation for the money it spent contesting the class-action charges, even though the plaintiffs withdrew most of those allegations prior to trial. At the time, he gave Microsoft until Feb. 12 to come up with its expense report.

As part of the stipulation to dismiss the case, however, the plaintiffs and Microsoft agreed that each would pay their own attorneys' costs and fees.